If you hop over to canonrumors there's a bit of stuff flying around about a mini-sized DSLR. If the assorted bits of info available so far are correct, it would be SMALLER than the mirrorless GH3, while retaining the native use of DSLR lenses. Of course, the mirrorless system may still have an overall size advantage if lenses are considered, and there are other smaller bodies to choose from also.

This does stem back to an interesting comment made by Canon even before the M was launched. They said that if small cameras were the goal, mirrorless wasn't necessarily a requirement. Since the M did appear I guess this comment was forgotten until now.

I guess the side question is, how useful is a smaller body without small lenses to go with it? Will there be more pancakes to come?

For most enthusiasts, anything smaller than a GH2 is too small, unless you're doing street photography where you'd be more successful looking like a tourist or non-pro.

Considering the external controls required, distance between the lens & the sensor (?), and the weight/form factor required to make the fotog comfortable, I'm not sure how much smaller they can go. The Olympus E420 or E620 were the smallest DSLRs to my knowledge, and they had smaller sensors than the APS-C crowd.

As you mentioned, and as the Sony NEX system best illustrates, having a small body is a moot point when most of the available lenses are 'standard' size.